‘DOF lobbied to delay tax cap on 13th month pay’

MANILA, Philippines - Lawmakers are being asked to delay the approval of a bill seeking to increase the cap on tax exemption of 13th month bonuses and other bonuses of employees in the public and private sectors.

Bill proponents Senate President Pro-Tempore Ralph Recto and Sen. Juan Edgardo Angara said the Department of Finance (DOF) had lobbied for the bill not to be passed this year.

“Actually, there was never a stage that the DOF supported our proposal, even from the start… there have been many intimations where the DOF said that they oppose this,” Angara said.

Angara and Recto debunked the claims of the Bureau of Internal Revenue (BIR) that the government will lose P26.8 billion in revenues.

Angara said the DOF has given conflicting figures on revenue loss, from P43 billion to P39 billion and later on P26 billion.

Workers will not be able to enjoy the perks sought in the bill  this year, he added.

Angara said the tedious processes in the crafting of a tax-related bill have to originate from the House of Representatives.

He immediately sponsored the bill late October after receiving the House’s version, he added.

Angara said a DOF official tried to stop him from sponsoring the bill.

Recto said the BIR was concerned that it would not reach its revenue targets for 2014 if the bill would cover bonuses for the year.

“If I’m not mistaken, there was a request from the executive not to pass the bill this year but next year,” he said.

Recto said he agreed for the bill to be implemented in 2015 rather than face a veto from the President.

“I think the finance department naturally got targets for this year, right?” he said.

“That’s okay. It’s clear that its effectivity would be next year. If we pass it now it might be vetoed. It might as well be next year,” he said.

Recto said the request was coursed through Senate President Franklin Drilon, who relayed the message to the senators.

In separate interviews, Recto and Angara said the Philippine Institute for Development Studies (PIDS) and other economists pegged the possible revenue loss at between P3.5 billion and P7.3 billion.

The affected sector will be employees from the middle class, estimated at 442,000 people.

Recto said the P82,000 cap was enough to cover inflation since 1994 where the P32,000 was the threshold for tax exemption.

The value of a peso then is equivalent to 36 centavos today.

“That assumes that everyone gets a bonus as much as P82,000,” Recto said.